ASPEN GROUP LIMITED Results Presentation FY18 28 August 2018
Contents 1 FY18 Highlights 2 Financial Results 3 Outlook 4 Portfolio and Acquisitions Update 5 Operating Model 6 Market Update 7 Proposed Governance & Investment Management Changes 8 Appendices
1 FY18 Highlights 3
FY18 Highlights 1.1 Aspen continues its acquisitions program enabled by enhanced platform PORTFOLIO FINANCIAL CAPITAL MANAGEMENT NAV improvement Core assets earnings growth Low debt balance sheet Finance facility of $45 million 1 in place • • • NAV of $1.19, net of the 5.0 cps special Core accommodation asset revenue capital distribution, and acquisition costs growth $6.7 million (44%) and operating (June 2020 expiry). Undrawn debt impact of 2.3 cps earnings growth $1.9 million (32%) in line capacity of $40 million. with acquisitions • • 49% increase in Core Assets portfolio Security buy-back activity completed with • Decline in non-core earnings of $2.2 a further 5.6 million of stapled securities • Koala Shores Holiday Park, NSW and million in line with divestment of bought back for a consideration of $5.6 Darwin FreeSpirit Resort, NT acquisitions Spearwood South industrial property in million settled for considerations of $10.2 million October 17 • and $19.5 million respectively Special capital distribution of 5.0 cps following successful divestment of • 4 independent revaluations undertaken for Spearwood South industrial property assets contributing to a $5.1 million uplift in value across the portfolio Successful divestment of ~$34 million 2 of • assets held for sale • Pre-sales activity and pre-development works both underway at Four Lanterns Estate 1. Reduced from $70 million in June 18 to minimize unutilized finance facility line fees. 2. Sale of Midland asset settled on 8th August 2018. 4
Key milestones 1.2 1H 2H FY19 FY18 FY18 • • • Spearwood South Industrial property and Development commenced at Tomago and Four Targeting ~ $40 million in acquisitions and Whitsunday Shores land sale settled Lanterns developments at existing properties • Acquisition – Tourist Parks • • Reduced finance facility to $45 million Sale of residences at Four Lanterns to ‒ Koala Shores commence • Woodside tenancy contract at Aspen Karratha ‒ Darwin FreeSpirit • Village extended to January 2020 Development to substantially progress at Tomago • 1H FY18 distribution 2.1cps in line with guidance Investigating move to external custodian 2 to • • 2H FY18 distribution 2.1 cps in line with guidance release ~$10 million cash to apply towards • Midlands land sale settled 1 investments • Explore adjacent sub sectors including affordable residential accommodation • ~$8 million investment to existing assets 1. Settled on 8 th August 2018 2. Any move to an External Custodian would be subject to approval via general meeting of security holders 5
2 Financial Results 6
Key performance metrics 2.1 Performance reflects group transition through acquisitions program FY18 FY17 Change Operating Performance Statutory Profit $m $m % • Current year impacted by Statutory revenue 1 22.8 19.0 19.7% – Net revaluation gain in the value of core assets $0.9 million Statutory profit / (loss) 0.8 (0.2) 446.5% – Investment driven acquisition costs incurred of Profit from operations $2.2 million Accommodation 9.5 7.0 35.9% Revenue Non-core 0.8 3.4 (76.7%) • Current year impacted by Total gross profit 10.3 10.4 (0.7%) – Increase in core revenue by $6.7 million or 44% – Decrease in non core revenue by $2.9 million or Operating expenses (5.3) (5.5) (2.8%) 74% due to sale of Spearwood South Earnings before interest, tax and depreciation (EBITDA) 5.0 4.9 1.5% Operating profit Depreciation and amortisation (1.6) (1.0) 58.0% • $3.0 million – 32% decrease from the prior year, Net financial income / (expense) (0.3) 0.6 (149.5%) primarily due to reduction in Spearwood South Operating profit before tax 3.0 4.5 (32.3%) profit as a result of its disposal during the year Income tax expense - - - • Result includes asset stabilisation expenses of ~$0.15 million Operating profit after tax 3.0 4.5 (32.3%) • Operating profit adversely impacted by reduced inventory at Tomago ahead of redevelopment Distribution FY18 $m CPS MER Operating profit 3.0 3.2 • 4.1% (on average total assets) 1.6 1.7 add: Depreciation (0.6) (0.7) less: Stay in business capex Distribution 4.1 4.2 Distributable earnings • 4.2 cps in line with guidance Distribution 4.2 Payout Ratio 100% 1. Includes non core revenue from Spearwood of $1.0 million in 2018 and $3.9 million in 2017 7
Core performance analysis 2.2 Aspen continues to consolidate and build its core portfolio Core Operating Profit 32% growth in core operating profit $m 9.0 • Tourism sector leading the growth with 100%, primarily driven by 8.0 two high quality acquisitions of Koala Shores and Darwin Growth 16% FreeSpirit 1 , as well as full year impact of prior year acquisitions 7.0 3.42 6.0 • Retirement sector, which is mostly stable long term revenue 5.0 stream, also increased by 11% 2.95 Growth 47% 4.0 • Corporate sector increased by 16% reflecting improving 3.0 efficiencies and physical occupancy 2.0 4.44 3.02 1.0 • Tourism weighted average cap rate increase YoY due to high 0.0 yield acquisitions during FY18 2017 2018 Retirement Tourism Corporate Weighted Average Cap rates 2 20.0% 17.8% 18.0% 16.0% 16.0% 14.0% 12.0% 9.8% 9.6% 9.1% 8.9% 10.0% 8.4% 8.4% 8.0% 6.0% 4.0% 2.0% 0.0% Retirement Tourism Corporate Total 2017 2018 1. Considering full year impact of current year acquisitions, the growth in core operating profit would have been 192% 2. Cap rates reflect the underlying income producing component of asset values 8
Reconciliation of statutory profit to operating profit 2.3 FY18 FY17 Operating profit $m $m $m 10.0 7.9 8.0 6.0 0.8 (0.2) Statutory profit / (loss) after tax 6.0 3.0 4.0 0.9 0.7 2.0 - - Income tax expense / (benefit) - (2.0) (0.3) (4.0) 0.8 (0.2) Statutory profit / (loss) before tax (6.0) (5.1) (5.4) (8.0) Change in fair value of PPE through Core Non core Net finance Corporate (0.9) 0.7 operating profit operating profit (expense) / income expenses profit and loss 2018 2017 Other expenses (including transaction / 2.8 1.8 acquisition costs) 1 Change in fair value of assets held for 0.0 1.1 Movement in Operating profit sale $m Loss from discontinued operations (non 7.0 0.2 1.1 - underlying) 6.0 1.9 (2.2) 5.0 Loss from equity accounted investees 0.1 - 4.0 (1.0) (0.2) 3.0 4.5 2.0 3.0 Non-operating loss (to add back) 2.3 4.7 1.0 - FY17 Increase in Decrease in Increase in Increase in FY18 3.0 4.5 Operating profit after tax operating core non core finance corporate operating profit operating operating expenses expenses profit profit profit 1. Includes $2.2m of acquisition and due diligence costs 9
Financial position 2.4 FY18 FY17 Change Property assets Balance Sheet $m $m $m • Two acquisitions (Koala Shores and Darwin FreeSpirit) settled during the year for $29.7 106.4 71.2 35.2 Accommodation assets 1 million. 8.1 40.2 (32.0) Assets held for sale / Other • Development commenced at Four Lanterns and Tomago. 13.4 22.7 (9.4) Cash Cash (4.7) - (4.7) Debt • Cash utilisation of $9.4 million in FY18 – Acquisitions - $29.7 million Gearing 2 % - - - – Distributions paid - $4.7 million – Special distribution paid - $5.1 million 114.9 124.6 (9.6) NAV – Share buyback - $5.6 million 1.19 1.22 (0.03) NAV $ per security Offset by – Operating cash flows - $5.7 million – Spearwood sale - $27.9 million $ MOVEMENT IN NAV PER SECURITY NAV 1.70 • NAV decline of $0.03 to $1.19 per security 1.60 0.05 • Decline primarily attributed to 1.50 – Special capital distributions of $0.05 (0.31) – Acquisition and due diligence costs written 1.40 0.36 off $0.02 1.30 1.52 (0.03) Offset by (0.01) (0.04) – 1.20 (0.05) Fair value gain in property assets by $0.05 1.27 1.24 1.23 • 1.22 NAV increase of $0.02 post capital distribution 1.10 1.19 1.19 1.17 1.17 1.17 1.00 FY17 Special capital NAV post Accommodation Fair value Assets held Cash Trade Liabilities FY18 distribution capitial Assets movements for sale receivables distribution and other 1. Includes $0.25 million (FY17: $1.0 million) non statutory property carrying value adjustments 2. Calculated as interest bearing debt, net of cash and cash equivalents divided by total assets 10
3 Outlook 11
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